Regulus Therapeutics (NASDAQ:RGLS) Q3 2017 Results Earnings Conference Call November 7, 2017 5:00 PM ET
Allison Wey - Vice President of Investor Relations and Corporate Communications
Jay Hagan - President, Chief Executive Officer, Principal Executive Officer, Director
Tim Wright - Chief Research and Development Officer
Dan Chevallard - Chief Financial Officer, Principal Financial and Accounting Officer
Matthew Luchini - BMO Capital
Joseph Thome - Cowen and Company
Nick Abbott - Wells Fargo
Good afternoon. My name is Sonya and I will be your conference operator today. At this time, I would like to welcome everyone to the Regulus Therapeutics third quarter 2017 conference call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. [Operator Instructions]. Thank you.
Ms. Allison Wey, Vice President of Investor Relations and Corporate Communications, you may begin your conference.
Thank you Sonya. Good afternoon everyone and thank you for joining us to discuss Regulus' third quarter 2017 financial results and corporate highlights. We are joined today by Jay Hagan, President and CEO, Dr. Tim Wright, Chief R&D Officer and Dan Chevallard, our CFO. Jay will provide opening remarks, Tim will share progress on our pipeline programs and then Dan will review the financial results before we open the line for questions.
Before we begin, I would like to remind you that this call will contain certain forward-looking statements concerning Regulus' future expectations, plans, prospects, corporate strategy and performance, which constitute forward-looking statements for the purposes of the safe harbor provision under the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from those indicated by these forward-looking statements as a result of various important factors, including those discussed in our filings with the SEC.
In addition, any forward-looking statements represent our views only as of the date of this call and webcast and should not be relied upon as representing our views as of any subsequent date. We specifically disclaim any obligations to update such statements.
I will now turn the call over to Jay.
Thanks Allison and thanks everyone on the call for joining us this afternoon. The third quarter was marked by operational execution, driving our clinical programs, focusing on research pipelines, strengthening our balance sheet and advancing our BD discussions. We started the third quarter by raising $46 million which extends our cash runway through Q1 2019 providing the necessary capital to fund our pipeline through several expected key program milestones.
Also in the quarter, we focused on resetting the organizational and operational priorities and expectations following the second quarter rightsizing with specific emphasis on our clinical programs. To that end and hope that Tim doesn't mind me stealing his thunder, we are pleased to report that we filed the IND on RGLS4326 recently and are on track for first in human testing later this quarter. Tim will talk about that and RG-012 in a minute.
Executing on the initiation of our clinical programs has obviously been the main focus for the quarter in order to set key milestones over the next 12 to 18 months. The team has been working very hard on implementing the redesigned Phase 2 HERA study protocol and a separate renal biopsy study protocol, both of which are now live.
When we set our timelines at the beginning of this year, we had not anticipated the breadth of the changes we and Sanofi ultimately decided to implement to the study. And while the redesign program implementation is taking some additional time, we believe the program is in a much better place. Consequently we anticipate data from the biopsy study in the first quarter versus the original production of year-end and HERA final results in Q1 2019 versus year-end 2018.
Importantly though, that we experienced last week at ASN among our ATHENA and HERA investigators was palpable. The novel biology seen with our anti-mir to microRNA-21, a target with broad literature supporting its role in fibrosis and the smarter trial designs employed in the Phase 2 programs well understood and appreciated by the scientific community and I had a great opportunity to meet with our investigators at the meeting.
Lastly, before I turn it over to Tim, after just six months as CEO of Regulus, I want to mention how particularly excited I am about the impact that changes to our scientific and organizational processes should yield for Regulus and our programs as we move forward. We have acquired a much more rigorous approach to our research efforts in fully characterizing the potential therapeutics in different model systems to be able to more quickly derisk their clinical development which should ultimately be reflected in a more focused and efficient R&D engine. This, coupled with the promise of oligonucleotide therapeutics finally coming into the mainstream should position Regulus as a clear leader in targeting microRNA biology.
Now I will turn the call over to Tim who will provide more details on our two clinical programs, RG-012 for the treatment of Alport syndrome and RGLS4326 for the treatment of autosomal dominant polycystic kidney disease or ADPKD. Tim?
Thanks Jay. Let's begin with our RG-012 program in Alport syndrome. We are wrapping up our ATHENA natural history study and we will close it out around year-end. I would like to thank all the patients and investigators that have contributed to the study in making it a great success. The data from the ATHENA study have been instrumental in our redesign of the RG-012 program and will contribute significantly to the understanding of Alport syndrome, its genetics and natural history of disease.
The ATHENA investigators met with us last week at ASN and we are planning for full data analysis, publications and presentations at scientific conferences next year. Building on the learnings from the ATHENA study and most importantly, the genetics and demographics of Alport syndrome patients with the greatest unmet medical need, we have redesigned the HERA study and the study will now focus exclusively on X-linked male patients with Alport syndrome. We will be examining the effect of RG-012 on the disease progression as measured by the rate of eGFR slope over a 48 week follow up period. We anticipate a readout of the blended interim analysis for safety and efficacy when all subjects reach 24 weeks of follow-up in Q3 of 2018 and the topline results of 48 follow-up in Q1 2019.
As part of the redesign, we removed the renal biopsies that were part of the original HERA design and now have a new study focused on pharmacokinetics and biomarkers, including the measurements of drug levels, target engagement and disease-related markers, measured in kidney tissue obtained by percutaneous renal biopsy. We expect the initial data from this study around the end of Q1 next year. These changes have been made in consultation with our partner Sanofi and they are in agreement with the revised clinical plans. In setting up the revised clinical studies, we received a great deal of support, enthusiasm and excitement from investigators and from the Alport community regarding the redesigned RG-012 program.
Let's now move on to RGLS4326 and the program for autosomal dominant polycystic kidney disease or ADPKD. As Jay mentioned earlier, we have accelerated this program and following a very positive pre-IND meeting, we recently filed the IND for RGLS4326 with the FDA. Assuming no regulatory or operational issues that may impact study startup, we are on track to initiate first in human dosing by year-end. We would expect data from this and our other planned Phase 1 studies throughout the second half of 2018 and into 2019, including a proof of mechanism study result in ADPKD patients.
Now turning to our preclinical pipeline. Our research efforts have been focused primarily on target identification and validation in diseases of the kidney and liver, two organs to which we can effectively deliver our oligonucleotide therapeutics. In parallel, we are exploring new delivery technologies to expand the tissues and route of administration so that we can leverage to open up a wider range of diseases and we can pursue a novel approach to new therapeutics.
And now I will turn the call over to Dan to discuss the third quarter financial results.
Thanks Tim. As you have heard today, the focus of the recent quarter has been to reset organizational and operational priorities while executing on our two lead programs. It is equally important for us to do while operating efficiently and within the confines of our resources. While the organization went through a significant transition earlier this year, I have been pleased with our broadly adopted sense of fiscal discipline and accountability.
With that, I would like to step through our third quarter financial highlights. R&D expenses were $12.7 million for the third quarter compared to $14.6 million in the third quarter of 2016. This decrease was driven by our planned reduction in personnel related costs, including non-cash stock-based compensation subsequent to our recent corporate restructuring. Excluding the one-time associated charges incurred in Q2 of this year, R&D expenses declined by approximately 15% in the third quarter of 2017 versus last quarter.
G&A expenses were $2.7 million for the third quarter compared to $4.8 million in the third quarter of 2016. Similarly this decrease was also driven by our planned reduction in personnel related costs. Excluding one-time charges incurred last quarter, G&A expenses declined by approximately 20% in the quarter of 2017.
Our net loss per share, both basic and diluted, was $0.18 per share in the third quarter of 2017 compared to $0.37 per share in the third quarter of 2016. Note that while our Q3 net loss decreased by approximately 20% versus the comparative period in 2016, these per share results are further impacted by our recent equity financing.
Before I turn the call back to Jay, I would like to provide an update on our cash position and cash burn as we look forward. As we have mentioned today, the third quarter was highlighted by our recent financing which gives us the capital to execute on our key near-term development objectives for RG-012, RGLS4326 and continue to fund our most promising research programs.
Having ended the third quarter with $71.4 million in cash, cash equivalents and short-term investments and with a third quarter cash burn of approximately $11.7 million, we are in line with our post-financing cash burn guidance of approximately $48 million per year and project our cash on hand to extend through Q1 2019. We are currently in the planning phase for our 2018 operating plan and we will come back with further refined projections on our year-end earnings call.
With that, I would like to hand it back to Jay.
Thanks Dan and thanks everyone for the opportunity to share today's update on our clinical programs, financial results and outlook. 2018 is shaping up to be a year during which we expect multiple milestones and the overall advancement of our Alport syndrome and ADPKD programs for Regulus. We look forward to continued execution through the remainder of the year and starting up 2018 with strong momentum to advance our overall pipeline while continuing productive business development discussions underway.
And with that, we are ready to take your questions. Operator, could you please open the lines?
[Operator Instructions]. Your first question comes from the line of Matthew Luchini from BMO Capital. Your line is open.
So now that you have redesigned the HERA study and you will focus on the X-linked male patients with Alport, can you give us a sense of how many of these patients are eligible for treatment?
Well, it's very interesting. We have done some preliminary analysis with electronic medical record search and it's actually, in terms of the patient population, the vast majority of patients with the diagnosis are actually X-linked males. There is certainly a subpopulation of females and there are also patients with other genetic mechanisms. But the majority of patients are X-linked males in unmet medical need population.
Matt, I just want to further amplify, this choice and what we have gleaned from the ATHENA natural history study coupled with the feasibility work we have done in looking through detailed electronic medical record systems, the statistics that we project in terms of further tightening up the standard deviation around slope as well as the progression of the disease, we find that this population really enhanced our ability to check the signal here in a 40 patient blinded Phase 2 study.
Okay. Great. Thank you very much.
Your next question comes from the line of Joseph Thome from Cowen and Company. Your line is open.
Hi there. Thank you for taking my question and congratulations on the progress. I just had a quick question on RGLS4326. Can you just give us an idea of maybe what the Phase 1 would like? And I think in the prepared remarks, you had indicated that there is a potential for additional Phase 1 studies in H2 2018. Was that just for your pipeline in general? Or was that specifically for RGLS4326?
Yes. That was generally for RGLS4326 and I will let Tim speak to the proposed Phase 1 for the comprehensive program forward.
Yes. So we are going to be starting with a single ascending dose in healthy volunteers and following that we will be doing a multiple ascending dose study that, at this stage, remains a little bit, how should I say, up in the air in terms of final definition of subjects. And the only reason I say that is because we are toying with the idea of incorporating the proof of mechanism into that multiple ascending dose and doing all patients. But we want to make sure we address the feasibility of that before we move into that kind of design. The alternative is to move into multiple ascending dose in healthy volunteers or a mixed population with a standalone proof of mechanism. But like I said, we are getting going on the single ascending dose between now and the end of the year and then we will move on to our multiple dose study for safety, PK, tolerability and some biomarker work.
Yes. And just to further amplify on that, you may have seen in the publication earlier this year that we saw an impact on a couple of kidney markers of disease that are measurable in the urine and plasma. And so we want to obviously see if that same effect can be recapitulated in humans. We are during some background Phase 0 work right now to set the stage for that test and with multiple dose of the therapeutic in patients with ADPKD, do we see similarly an impact on disease markers that would give us confidence that A, we are hitting the target and B, we are having the intended effect.
Great. Thank you very much.
There are no further questions at this time. I will turn the call back over to Mr. Jay Hagan.
Thanks very much. I just want to emphasize two things. One, well the HERA study is planned for X-linked males. It doesn't mean that we intend to pursue females more broadly and including in the biopsy trial. And separately, we will be participating in the Stifel conference next week and look forward to investor update then. But it looks like we might have one other question. I don't know. So maybe you want to circle back.
Certainly. Your next question comes from the line of Jim Birchenough from Wells Fargo Securities. Your line is open.
Hello. It's Nick, in for Jim. So many thanks as much for squeezing me in. Busy afternoon for everybody. But can I just go back to the HERA trial. Did you actually dose patients prior to the redesign?
We did dose one patient prior to administrative halting the study back when we decided to do the MAD study.
And was that patient an X-linked patient?
No. Just to be clear, Nick, this is always been the plan. We only decided -- so we had not, when I described the earlier dosing, that was what was done late last year prior to halting the program, doing the MAD and reviewing the results from the MAD as well as our previous efficacy results to arrive at what is now live on clinicaltrials.gov. And the final piece in terms of the change that we hadn't disclosed up until this point was that we found that by focusing on the X-linked males, not only is that a population where we have seen the most significant unmet need, but also that it was a population where the standard deviation around slope change was much tighter given the homogeneity of that population which would then yield obviously better statistics for us in being able to detect a signal in this trial.
Okay. And then as far as the biopsy trial, I just caught your last comment that that would be open to females. So that's not going to be restricted.
And then for the ADPKD, is the first in human trial, is that going to be healthy volunteers?
In the SAD portion of the study, yes, in healthy volunteers. And we have been encouraged by the agency to move fairly quickly to patients after establishing safety in healthy volunteers. So as Tim mentioned, we are still working on putting the final touches on the second part of that Phase 1 program and I just walked through that we intend to incorporate a proof of mechanism type study design in there where we are going to see if we can recapitulate what we have seen in animals where we see an improvement in certain markers of kidney function from treatment with 4326.
And that will just have urine biomarkers for that or blood or a biopsy?
Urine and blood, correct. No, you wouldn't want a biopsy the PKD patient.
Great. Okay. Thank you very much.
Thank you. So I think that concludes things, Sonya.
This concludes today's conference call. You may not disconnect.